DEFA14A: ISS Rejects Saba's Proposals to Terminate BlackRock as Investment Adviser for Multiple Closed-End Funds

Institutional Shareholder Services (ISS) recommends shareholders vote against Saba Capital's proposals to terminate BlackRock as investment adviser for several closed-end funds and supports BlackRock's board nominees.

Summary

• ISS has recommended that shareholders vote against Saba Capital Management's proposals to terminate BlackRock as the investment adviser for multiple closed-end funds, including BCAT, BFZ, BIGZ, BMEZ, BSTZ, and ECAT.
• ISS supports BlackRock's board nominees at BCAT, BMEZ, BNY, and MPA.
• ISS also supports board nominee Arthur Steinmetz at MHN and MYN.
• ISS rejected the nominees put forth by Saba at the majority of the funds.
• BlackRock has recently announced enhancements across its closed-end fund complex, including discount management programs, distribution increases, and fee waivers, providing $2.9 billion in liquidity.
• Shareholders are advised to vote using the WHITE proxy card and disregard any gold proxy cards from Saba.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook for BlackRock, with ISS support for its management and board nominees. However, the lack of support for nominees at BIGZ and ECAT and the ongoing proxy battle with Saba Capital introduce some uncertainty.

Positives

• ISS support validates BlackRock's investment experience and the board's commitment to shareholders.
• ISS recognizes improvements in fund performance, such as BCAT's improved returns and narrower discount to NAV.
• ISS notes that BIGZ's distribution rate has exceeded that of ASG.
• ISS acknowledges that ECAT has improved returns, such that TSR since inception is now better than peers, and has narrowed the NAV discount, bringing the measure in line with peers.
• BlackRock's enhancements provide $2.9 billion in liquidity across its closed-end funds.

Negatives

• ISS did not support BlackRock's nominees at BIGZ and ECAT.
• ISS acknowledges the potential lack of independence of Saba's nominees.

Risks

• Electing additional dissident nominees could introduce more change at the board level than is warranted.
• If the dissident wins a majority of seats, the board may move to replace the investment manager and choose the dissident as its manager.
• Changes and volatility in political, economic or industry conditions, the interest rate environment, foreign exchange rates or financial and capital markets, which could result in changes in demand for the funds or in the funds net asset value.

Future Outlook

BlackRock will update performance and certain other data for the funds on a monthly basis on their website in the Closed-end Funds section of www.blackrock.com, as well as certain other material information as necessary from time to time.

Management Comments

• R. Glenn Hubbard, Chair of the Boards of BlackRock Closed-End Funds, stated that the ISS recommendations, as well as those from Glass Lewis, speak to BlackRock's depth of investment experience and the Boards track record of stewardship and consistent commitment to the best interests of all shareholders.
• Hubbard added that while they agree with some of ISS's conclusions regarding BIGZ and ECAT, including the potential lack of independence of Saba's nominees, they continue to believe that their nominees are the right stewards to represent all shareholders.

Industry Context

This announcement reflects the ongoing activist investor activity in the closed-end fund space, where firms like Saba Capital seek to influence fund management and board composition to unlock value. The outcome of these proxy battles can significantly impact fund strategies and shareholder returns.

Comparison to Industry Standards

• The document mentions Liberty All-Star Growth Fund, Inc. (ASG) as a benchmark for distribution rates, noting that BIGZ's distribution rate has exceeded that of ASG.
• The document compares the discount to NAV of BCAT to its peers, noting that it has narrowed.
• The document compares the TSR of ECAT to its peers, noting that it has improved and is now better than peers.

Stakeholder Impact

• Shareholders are impacted by the outcome of the proxy vote, which will determine the fund's management and board composition.
• BlackRock's reputation and ability to manage closed-end funds are at stake.
• The outcome could influence the fund's investment strategy and shareholder returns.

Next Steps

• Shareholders to vote on the proposals at the upcoming annual meetings.
• BlackRock to continue engaging with shareholders to address concerns and highlight the benefits of its management.

Key Dates

Keywords

BlackRock, Saba Capital, ISS, proxy, closed-end funds, investment adviser, board nominees, BCAT, BFZ, BIGZ, BMEZ, BSTZ, ECAT, BNY, MPA, MHN, MYN